Nifty Metal index came under selling pressure on Monday, falling 1.6 percent after gaining for five consecutive sessions. The decline was led by National Aluminium, Steel Authority of India Limited (SAIL) and Vedanta as weak global sentiment weighed on the sector.
Investors are concerned over United States' earlier announcement of 25 percent tariffs on all steel and aluminium imports. While India is not a major exporter of metals to the US, analysts noted that any shift in global prices could have a cascading effect on domestic markets.
Karthick Jonagadla, smallcase Manager and Founder & CEO at Quantace Research noted that a combined impact of US tariffs, the redirection of Asian steel exports (especially from China), and the awaited domestic safeguard duties have set the stage for a challenging environment for the Indian metal sector. Coupled with the technical pressures from derivative expiries and a shortened trading week, the metal index is likely to experience continued volatility in the near term.
He added that the possibility of retaliatory tariffs on BRICS nations further adds to the negative sentiment. "From April to November 2024, Chinese steel exports to India surged by 22.8% year-over-year. Analysts now project that up to 4 million tons per year—originally destined for the US market—could flood into India. This sudden oversupply is intensifying competitive pricing pressures, driving domestic steel prices lower.
"Volatility is expected to persist due to the combined effects of a shortened trading week and the derivatives expiry, which historically heighten market swings. Option chain data suggests that key heavyweights in the Nifty Metal index are trading near sensitive levels: TATASTEEL: Rs 139, JSWSTEEL: Rs 970, HINDALCO: Rs 620, VEDL: Rs 440, ADANIENT: Rs 2280. Any breach in these levels could trigger further selling pressure, amplifying the move in Metals. These heavyweights make 70% of the weightage in the Metal Index," he added.
During intraday trade, the Nifty Metal index dropped as much as 1.65 percent, with all 15 constituents trading in the red. National Aluminium Company Limited led the decline, slipping 4 percent to an intraday low of Rs 192.51 on the NSE. SAIL fell 3.47 percent, while Vedanta dropped 2.3 percent.
NMDC also saw a sharp decline, hitting an intraday low of Rs 65.8 per share, down 2.85 percent. Other major stocks, including Hindustan Zinc, Tata Steel, Hindalco, and Hindustan Copper, also witnessed selling pressure.
The correction comes after metal stocks surged last week on speculation that the government may announce safeguard duties to protect the sector. On Friday, Nifty Metal was the only sectoral index to close in positive territory even as broader markets ended in the red.
Krishna Appala, Sr. Research Analyst at Capitalmind Research further added that investors booked profits after recent optimism around robust domestic demand and easing raw material costs. The correction reflects broader market caution, causing selling pressure in key constituents like Tata Steel, JSW Steel, and Hindalco. Despite benefiting from India's strong infrastructure push, metal stocks faced reassessment amid rising external and internal uncertainties.
"Globally, a strengthening U.S. dollar near 106 and indications from the Federal Reserve of fewer rate cuts in 2025 have pressured industrial metal prices, notably steel and copper. For India, heavily reliant on imported raw materials, the rupee's depreciation to 86.7 against the dollar amplifies input costs, squeezing margins for domestic metal firms. Muted Q3 FY25 earnings, elevated coal and iron ore prices, and uncertainty around future government infrastructure spending further impacted investor sentiment," he said.
Industry players in the steel and stainless steel segments have been urging the government to address the issue of rising imports. They argue that increased shipments from select countries, including China, have hurt their competitiveness and are seeking policy measures to counter the impact.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
